Gold prices hit another record of just above $3,500 per ounce on Tuesday after U.S. President Donald Trump's latest salvo against Federal Reserve (Fed) boss Jerome Powell added fuel to fears about the central bank's independence, rattling investors and increasing demand for the safe-haven asset.
With the U.S. tariff blitz still causing ructions on global trading floors, investors are now dealing with the added worry that Trump will try to remove the country's top banker.
Spot gold was up 0.8% at $3,452.15 an ounce by 9:09 a.m. GMT, after earlier rising as far as $3,500.05. U.S. gold futures gained 1.2% to $3,464.50.
"The latest leg of the rally was triggered by President Donald Trump’s public attack on Federal Reserve Chairman Jerome Powell," said Alexander Zumpfe, a precious metals trader at Heraeus Metals Germany.
"As political uncertainty and monetary policy concerns persist, gold is likely to remain well supported. Key technical support levels are now seen at $3,450 and $3,400, while the next psychological target on the upside is $3,600 per ounce," Zumpfe said.
Trump took a swipe at Powell last week for his warning that the sweeping levies would likely reignite inflation, saying his "termination cannot come fast enough" and adding that "I'm not happy with him. I let him know it and if I want him out, he'll be out of there real fast, believe me."
While that raised eyebrows, the Republican tycoon sent shivers through markets Monday by calling on the Fed boss again to make pre-emptive cuts to interest rates and calling him a "major loser" and "Mr Too Late."
He said on his Truth Social platform that there was "virtually" no inflation, claiming energy and food costs were well down and pointed to the several reductions by the European Central Bank (ECB).
The outbursts have fanned concern that Trump is preparing to oust Powell, with top economic adviser Kevin Hassett saying Friday that the president was looking at whether he could do so.
Wall Street share indexes fell around 2.4% on Monday, and the dollar hit three-year lows. A weaker U.S. currency makes dollar-priced bullion less expensive for buyers overseas.
"The first volley on Thursday had little market reaction, but Monday's second barrage has seen an intensification of the 'sell America trade,'" said National Australia Bank's Tapas Strickland.
"Whether or not President Trump is legally able and willing to move against the U.S. Fed, the jousting underscores the loss of U.S. exceptionalism and the very real policy risk for investors."
Prices of gold, traditionally seen as a safe-haven asset amid economic and geopolitical uncertainty, have risen by nearly a third so far this year.
"It is also interesting that normally when equities hit the skids the way the U.S. markets did yesterday, gold would come down under distressed liquidation. This time that has not happened," said StoneX analyst Rhona O'Connell.
"Gold is the only real safe haven since the dollar has been hit and Treasuries are selling off on a broad pullback from U.S. assets," said Neil Wilson at Saxo.
Traders will look to speeches by several Fed officials later this week, hoping for insights into future monetary policy amid the concerns about the central bank's independence.
Spot silver fell 0.9% to $32.41 an ounce.
Platinum gained 0.7% to $968.15, and palladium jumped 1.8% to $942.67.
Stocks swung between gains and losses on the first full day of business after the Easter break.
Tokyo, Sydney, Seoul, Wellington, Taipei and Bangkok fell with London, Paris and Frankfurt also in the red.
But Hong Kong, Shanghai, Singapore, Manila, Mumbai and Jakarta rose.
Analysts warned of another rout if Trump were to try to fire Powell, which many said could cause a crisis of confidence in the U.S. economy.
"Were Powell to be fired, the initial reaction would be a huge injection of volatility into financial markets, and the most dramatic rush to the exit from US assets that it is possible to imagine," said Pepperstone strategist Michael Brown.
"Lower, much lower, equities; Treasuries sold across the board; and, the dollar falling off a cliff.
"Any sign of the longstanding, independent nature of the Fed coming under threat would see investors across the globe selling every single U.S.-based asset that they have, and also poses the genuinely scary prospect of upending the entire way in which the global financial system operates."
